Benchmarking danger!

Big accounting firm asked about staffing models [see video, from time 22.00 ] to replace dumb benchmarking [that is: best-in-class leverage – partners:juniors ratios – for each type of business?] Benchmarking is worse than useless, it is dangerous.

Like all these big accountants and other professional firms they have several lines of business [audit, tax, advisory, M&A …] each needing a different mix of juniors, managers and partners. This is a classic dynamic-model issue, with staff moving in, out and through several stages [see a generic model].

The number of staff needed of any type, for any specific service depends entirely on the details of the business – the size and nature of the clients and projects, changes occurring and expected to occur to each of those, features of the firms’ delivery models, such as the impact of technology on processes and productivity, and on the dynamics of the existing staff structure – you need more juniors relative to the workload, for example, if attrition rates are higher either in that group or more senior levels and if you expect the business to grow.

Benchmarking can lead companies to adopt targets that are totally inappropriate for their circumstances, plus it is quite probable that the ‘leading’ players on any ratio have themselves got it wrong. [Some years ago, Shell followed benchmark targets for N Sea maintenance spending – and 5 years later had to overspend hugely to fix a disastrous collapse in the reliability and even the safety of its production operations].

What the accounting firm will likely do is build a proof-of-concept model for a single unit of the business, then build on that to extend the model to the whole business. They will end up with more than just a model explaining how things work. They should aim for a substantial model that continually displays the structure and performance of the real business + enables forward planning for all staffing-related issues against a range of alternative futures – a live working tool for staff planning.

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